Growth expectations for Public Joint Stock Company Magnit (MISX:MGNT) are high, but many investors are starting to ask whether its last close at RUB5175 can still be rationalized by the future potential. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors. See our latest analysis for Magnit
What are the future expectations?Investors in Magnit have been patiently waiting for the uptick in earnings. If you believe the analysts covering the stock then the following year will be very interesting. The consensus forecast from 15 analysts is certainly positive with earnings per share estimated to surge from current levels of $6.404 to $8.427 over the next three years. On average, this leads to a growth rate of 11.41% each year, which illustrates an optimistic outlook in the near term.
Can MGNT’s share price be justified by its earnings growth?
Stocks like Magnit, with a price-to-earnings (P/E) ratio of 12.98x, always catch the eye of investors on the hunt for a bargain. In isolation, this metric can be a bit too simplistic but in comparison to benchmarks, it tells us that MGNT is overvalued compared to the RU market average ratio of 7.67x , and undervalued based on its latest annual earnings update compared to the consumer retailing average of 20.36x .
We already know that MGNT appears to be undervalued based on its PE ratio, compared to the industry average. But, since Magnit is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 12.98x and expected year-on-year earnings growth of 11.41% give Magnit an acceptable PEG ratio of 1.14x. So, when we include the growth factor in our analysis, Magnit appears slightly overvalued , based on the fundamentals.
What this means for you:
MGNT’s current overvaluation could signal a potential selling opportunity to reduce your exposure to the stock, or it you’re a potential investor, now may not be the right time to buy. However, basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PEG ratio is very one-dimensional. If you have not done so already, I highly recommend you to complete your research by taking a look at the following:
- Financial Health: Is MGNT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Past Track Record: Has MGNT been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of MGNT’s historicals for more clarity.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.